Can Britain seal trade deal in 2-year time frame?

Thursday, March 30, 2017 - 01:56

Britain heads towards the complexities of its Brexit negotiations with an ambitious target of concluding an exit deal and trade terms within two years. But is that feasible, given just how much is at stake for both sides? Ivor Bennett reports.

▲ Hide Transcript

▶ View Transcript

This is where the heavy lifting really begins.
How to leave the single market and keep Britain's economy intact.
Theresa May has previously said no deal is better than a bad deal.
But with the clock now ticking, there are plenty who disagree.
SOUNDBITE (English) GARVAN WALSHE, CEO, BREXIT ANALYTICS, SAYING:
"Well, trade could dip by 30 percent over the long-term and the new trade deals that Britain's hoping to negotiate with the United States, and India, and China, won't be able to make up for that loss. Because the one rule of trade economics is that as distance doubles, trade halves."
Ryanair and Ford are among the companies warning against the danger of trade tariffs.
But one thing in Britain's favour, is that a bad deal would be bad for both.
SOUNDBITE (English) MIKE INGRAM, MARKET STRATEGIST, BGC PARTNERS, SAYING:
"You know we have got very substantial trade ties with the European Union. I think that the UK Brexit negotiations have been at pain to say it is in your economic interest and it would be an act of self-harm if we didn't have a sensible agreement."
What's more, if there was a good time to Brexit, this would surely be it?
SOUNDBITE (English) JAMES HUGHES, CHIEF MARKET ANALYST, GKFX, SAYING:
"We know that the growth is strong, we know unemployment is low, we know wage growth is tepid still, but that's nothing that isn't echoed around the world, and we know inflation is pushing higher. Which again isn't something that is different to anywhere else in the world, so economically we are on a sound footing."
The bigger problem, perhaps, is the timeframe.
Even if they were the best of friends, is two years really enough?
SOUNDBITE (English) GARVAN WALSHE, CEO, BREXIT ANALYTICS, SAYING:
"I think you're looking at another five years, at least, because that's how long a serious trade deal is likely to conclude. The problem with that kind of extension is that it runs through the British political timetable. You'd have another general election. That's a moment of major political risk for any government."
Given the alternative - it's probably a risk Britain's willing to take.
That's if, come the time, the remaining EU members agree to an extension.

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV. Learn more about Thomson Reuters products: